What You Need To Know About Obama's New Mortgage Aid Plan

WASHINGTON -- The Obama administration on Friday announced a major reworking of its troubled $75 billion plan to prevent foreclosures. The revamped program is now designed to aid jobless homeowners and people who owe more on their mortgages than their homes are worth.

Here's a look at the details:

Q. How many homeowners will this help?

A. The effort is designed to enable the government to reach its original goal of helping 3 million to 4 million homeowners avoid foreclosure by the end of 2012. That benchmark has so far proved impossible to approach. Only 170,000 homeowners have completed loan modifications, out of 1.1 million who began the government's Home Affordable Modification Program since it started last year.

Q. How many borrowers are in trouble?

A. About 6 million homeowners have missed at least two months of payments. And experts warn that 10 million to 12 million borrowers are in danger of foreclosure over the next three years. A growing risk is among homeowners who are "under water": They owe more on their loans than their homes are worth.

Q. How does the new plan work?

A. Borrowers will get help in three ways: Jobless homeowners can get a three-to-six-month break on their mortgage payments. Banks will get financial incentives to reduce mortgage balances for under-water borrowers. And lenders can offer refinanced loans backed by the Federal Housing Administration to these borrowers.

Q. When will all these programs be available?

A. Government officials didn't specify but said they should become available in the coming months.

Q. I'm unemployed. How do I get help?

A. That piece of the program is designed to give homeowners more time to find a job. Borrowers will have three to six months in which they'll have to spend no more than 31 percent of their monthly income on their mortgages. If you do find a job during that time, you will be evaluated for a loan modification that could permanently reduce your payments. To qualify, you need to live in your home, have a mortgage of below $729,750 and receive unemployment benefits.

Q. What happens if I don't get a job after the time is up?

A. Lenders will encourage you to consider a short sale, in which you sell your home for less than the mortgage amount. Another option is a deed-in-lieu of foreclosure, in which you agree to hand back the property to your lender.

Q. I owe more on my mortgage than my house is worth. Will this help me?

A. Maybe. The program depends on the willingness of mortgage companies to participate. Their track record has been shaky at best.

Q. How does it work?

A. Mortgage companies that already participate in the government's foreclosure prevention program will have to consider reducing the mortgage amount for borrowers who owe at least 15 percent more than their home's current value. Those reductions will happen gradually over three years and apply only if you miss no payments. Those companies will receive expanded incentives to do so.

Q. What kind of incentives?

A. For every dollar of principal the lender reduces, they will receive a subsidy of 10 to 21 cents. The larger subsidies will help reduce principal of borrowers who are less under water.

Q. How do I qualify?

A: You must have a mortgage of less than $729,750. You also must show that you are in financial trouble. And you have to be spending at least 31 percent of your pretax income on your mortgage payment.

Q. So how do I apply?

A. Call the company that sends your mortgage bill, also known as your mortgage servicer, to see if you qualify. If you can't get hold of someone, try a nonprofit housing counselor. NeighborWorks America runs a national network of foreclosure counseling agencies. Try: http://www.findaforeclosurecounselor.org/

Q. How does the refinancing program work?

A. Some borrowers will be able to refinance into loans backed by the Federal Housing Administration, which insures loans against default. The FHA will get $14 billion in incentive money from the federal bailout fund to make this happen. Lenders will have to reduce the homeowners' primary mortgages by at least 10 percent.

Q. How do I qualify?

A. Homeowners must not have missed any payments on their home loans, must live in their home as a primary residence and must provide proof of income.

Q. How do I apply for the FHA plan?

A. You don't. It's voluntary for mortgage companies. They'll evaluate whether they want to offer this option to homeowners.

We found this article here.

Setting a Budget and Pre-Qualifying for a Mortgage

By: Faith Warner

The goal of having a big, elegant house is not something that is impossible to achieve. If you are planning to buy a property and start a new life in it, do not rush into things. You should be aware of the different preparations that would help you acquire a new home without further complications. Read this article and find out more about the things that you should do before having a new property under your name.

Setting your budget

A budget plan is one of the most effective tools in finding a property that you would enjoy for a lifetime. Always prepare a budget list that could guide you in choosing houses that you would like to own in the future. Once you have decided on your price ranges, always stick to it, and never buy something that would wipe out your savings account.

Researching about home listings

The best way to design an effective budget plan is to research about the current prices of properties in the real estate market. By doing this, you will have an idea about how much money you will need to spend on a particular type of property. For an example, if you want to purchase a 4-bedroom home, you should look for listings containing 4-bedroom homes and analyze the prices being offered.

You can also have a clearer idea about the situation of the market by hiring a real estate agent. An agent has all the necessary information that you would need to know about purchasing homes. Never let an opportunity to work with a credible agent slip away.

Pre-qualifying for a mortgage

Before even contacting the owner of the house that you wish to buy, you should secure a mortgage pre-qualification document. This will state the amount of money that you would need to pay monthly in order to keep up with your home loans. It would also give you an idea about the mortgage interest rate and principal amount that you would need to pay regularly. Lastly, it would state the maximum mortgage that you would be allowed to borrow from your trusted lender.

Making a reasonable down payment

Before owning a property, you should calculate the down payment that you would need to make. Remember that the ideal initial payment is 10% of the property’s price. Once you succeed in saving this kind of money, you are ready to face your lenders and ask them for a mortgage.

Why should you make a 10% down payment? The answer to this question is simple. Once you have done this, your lender will be more confident in approving your mortgage requests. It would make them more comfortable because they will understand your ability to repay loans, as well as your credibility as a borrower.

Buying a new home will never be hard if you do the right steps and if you are aware of the technicalities of real estate transactions. Consider hiring a financial adviser who can help you determine the price of a property that you will have no troubles with buying. Always remember that with the right people who will guide you, you can always achieve your dream of getting that big and attractive property.

Rural Development Loans

If you plan to build in Eagle Mountain or Saratoga Springs, Utah, make sure you check out Rural Development loans.

They can lower your monthly payment hundreds of dollars.

If you are interested, Tuscany Homes is ready and willing to help you build out on the west side of Utah lake.

To read more information about the loans, go HERE or call Bob Peavley at 801-414-6212.

Calculating Your Home Purchase Budget

By: marco benavides

If the financial and real estate crisis we have been going through for what seems like forever have taught us anything, it is that overstretching our home purchase budgets to get into a home can lead to financial ruin. Things have been blamed on home buyers trying to get into too much house, but lending practices were much looser, and they both contributed to what we are now seeing.

We should also have learned the importance of setting a home purchase budget, and that means being able to do a fairly accurate calculation. Doing the math is not really as difficult as it may seem because you can use the same formulas that lenders are going to use.

However, before you even start thinking about the math, sit down and write the things you actually need in the house you would like to buy, and then make a list of the things you would want your house to have. If you look at the homes with the things you need and the ones with the things you want, you are going to find that the ones with the things you want can be much more expensive.

Before you set your budget, bring your wish list down to something much more reasonable so that you do not end up trying to get into much more house than you can actually afford. If you stay within your means and needs, you will not place yourself at risk of losing your home if you should have some expense come along completely out of the ordinary.

Establishing your budget is as easy as following what is called the 20/28/36 rule or debt-to-income ratio, which is what lenders will use in their calculations. You have to determine your gross annual income because it is what will guide you and let you know how much house you can get into.

The first number in the rule is not actually calculated from your annual income. It stands for 20%, and it is the amount of money you should use for a down payment; 20% percent of the home's selling price. If you can put more toward the down payment, you can lower your monthly payments, so it is something that you should really consider thoroughly.

The number 28 is actually 28% of your gross annual income, and it is the maximum amount that should go to paying the mortgage, real estate taxes and fees. The last number is 36% of your gross income, and it is how much of your annual gross earnings should go toward paying your debts and mortgage.

The lower the percentages, except the 20%, the better off you are going to be because you will be able to meet all of your financial obligations. You will be lowering the risk of losing your home if some financial hardship should come along and bring some hard times. On the other hand, if you are already stretched way too thin, any type of hardship will end up causing financial ruin, and it will perhaps even lead to you losing your house.

Article From Real Estate Pro Articles

Loan Modification Process – Things To Know

By: David Davis

Need help with your mortgage? Did you receive a foreclosure notice? Are you afraid that you may be a victim of foreclosure? If you have some difficult financial situation that threatens the security of ownership of your home, you almost certainly need to consider loan modification. Though a home loan modification can slow the process, you have fewer alternatives the longer you wait.

However you do not have to wait. Select a loan modification attorney, obtain the best possible deal and craft the procedure as trouble-free as possible. There are several important tips you can do to speed up the loan modification procedure. Once your home loan modification takes place, following steps can assist you obtain more positive results.

Put everything in documents. It is not exceptional for homeowners, especially smaller ones, to lose track of your practical application documents. In order to keep away from holdups, make a top all your efforts are documented and continued file. This acknowledges all the calls you make and receive, both from your lender and loan adjustment lawyer. Keep receptions of all your proceedings, and make copies thus you do not have to unleash of the originals.

Make your own report. Part of every home equity loan modification is a financial worksheet, which will be the primary basis for reservation. Nearly all loaners have their own forms; however it will not harm to make your own as well. If your lender beleaguers on using their worksheet, at least you will have all the information ready.

Keep all your accounts. The financial worksheet will require you to roll up old bills and hold on to the ones that continue adding up. This will assist you go on the actuality as precise as possible. Even though they don’t ask for it, it is best to disclose them in any event. That way, there’s no ground for your lender to doubt your instruction. The more test copy you have, the better your adventures of receiving that home loan modification.

In any case, make sure that you give as precise and verifiable information to your loan modification attorney so loan modification servicers discuss with the lenders to get the best possible rate for the loan.

Article From Real Estate Pro Articles

Facts for First-Time Home Buyers to Consider During Home Buying Process

By: marco benavides

First-time home buyers can sometimes get overloaded with information during the process of looking for a mortgage loan and buying a home. It is therefore imperative to consider some things before even getting involved in the process. If you go into the home-buying process without a clear and concise idea of what you need, you might run into problems. You might also run into problems if you have not taken into account how much you can actually afford in mortgage loan payments.

Much has been made of people actually not wanting to pay mortgages when they owe more than their home is worth. However, according to an article in Time Magazine back in July, most mortgage defaults still happen because homeowners cannot pay the mortgage. With this in mind, you should make some serious calculations as to how much you can actually pay toward a mortgage loan without putting yourself in a financial bind.

This means that you need to add up your credit card payments, car payment and all your other bills to see how much money is going out of your income to pay for your debts. If your debt obligations and your mortgage loan payments are over 36%, mortgage lenders will normally reduce the amount that you can borrow for a mortgage. Financial institutions want to be as sure as possible that you can pay the money that you are going to borrow for your mortgage. Therefore, if you have many debt obligations, it would be better to pay down your debt and wait to buy a house.

For renters, the best advantage that homeownership has over renting is that you will actually be building equity in your home. It is an investment that will pay off as you make more payments on your home mortgage loan. You will not see much equity during the first few years of the loan because of how much interest you pay off in the beginning. However, the loan balances off in the middle and actually tilts to your advantage toward the end. As a renter, the apartment or house that you are living in will never be yours as long as you are paying rent.

If you are wondering whether you can buy a home despite having bad credit, you should look into some of the mortgage loan programs offered by the federal government. You might want to contact a housing counseling agency funded by HUD. You will find that the federal government offers potential home buyers a lot of information and assistance. You simply have to contact the corresponding agency and request information on the government programs being offered. It is to your advantage to go into negotiations for a home mortgage loan with as much information as possible.

The information you gather will help you determine whether buying a house is right for you at this time and what you have to do in order to get the best terms available. For those who determine that they can meet their debt obligations and mortgage loan payments, owning a home is quite a satisfying experience. Owning a home provides your family with stability and security and most people consider these things priceless.

Article From Real Estate Pro Articles

Mortgage Rates Changing April 1

Fixed or Floating Home Loan?

Go HERE to read a Q&A about fixed/floating home loans.

5 Qualifications for a Low Interest Home Loan

Getting a low interest home loan depends on a number of personal factors in your application. While the majority of the factors listed below are personal, there are also market factors that will affect your home loan rate. If you meet personal criteria for a low interest loan, though, you will be less affected by swings in the market at large.

1. Good Credit Score

The first thing any lender will consider when sourcing your loan is how you have performed with credit in the past. Borrowers who have taken out a number of installment loans in the past and paid them off will be the most attractive. If you have never had an installment loan, this will hurt your chances of getting a good rate even if you have performed well in managing your credit card debt. Further, those borrowers who have only positive credit marks but a short credit history may be penalized in their interest rates.

2. Large Down Payment

The more you can put down, the better deal you will get. You will have less total funds in your mortgage. Further, you will providing the lender with a sign of good faith in your ability to save and manage money. Borrowers who have very low down payments often scare mortgage lenders who wonder if they can truly afford the home. You can also avoid paying mortgage insurance on a loan lower than 20%.

3. Shorter Loan Option

Extending the life of your loan will typically lower your monthly payments but raise your interest rate. The borrower needs to anticipate and compensate for inflation in that time period. Paying off your mortgage in 10 to 15 years will lead to a lower interest rate and a lower amount of total funds paid to the mortgage company.

4. Stable Income

One factor many borrowers forget is the income consideration. It is best if all applicants on the loan document have a stable employment history. Working for the same company for at least two years with reasonable raises and promotions is a sign of expected continual income growth. If one of the applicants on the loan has been laid off, recently started a new job or is self-employed, the interest rate may go up. Some purchasers decide to leave one member of a party off an application for this reason. If the single applicant has an income high enough to cover the mortgage payment, this may be a good option.

5. The Right Time to Buy

All the personal factors listed above will not save you if you are looking to purchase at a bad time. You should look for a time when the national interest rate is fairly low. However, a rate close to zero may be indicative of a credit market collapse, meaning lending institutions will be holding back from new loans. It is not best to buy at the top of the market either, when loan rates and home prices are their highest. While you may never be certain when is truly the best time for you to buy a new home, paying attention to these factors helps you make a more informed decision.

This article was found HERE.

Tax credit spurs U.S. home sales

The National Association of Realtors said sales surged a record of 10.1% in October, the highest since February 2007.

Read more about this HERE in an article by the Financial Post.

Newer, Stricter FHA Streamline Refinance Program

Dan Green summarizes the newer, stricter FHA Streamline Refinance Program (which changes effective November 17, 2009)

"Want to refinance on the FHA Streamline Refi program? Better get your application in-process pronto. There are 4 days left to apply for an FHA Streamline Refi under the 'old rules.' Starting November 17, the FHA changes its underwriting guidelines for the popular FHA-to-FHA refinance program..."

To see the rest of his article, go HERE.

How To Buy Your First Home

You are seriously thinking about investing in your very first home. You hear all kinds of messages like: “The time is right to buy!” “Don’t miss out on your chance to buy a home!” On the other hand, you listen to the economic news, family, and friends and you wonder, “Is this really the right time to invest in a new home? And if so, how does it really work?” Where do you start and what do you do when making the most significant financial decision of your life, investing in a new home?

The very first step is to find a competent professional real estate agent to guide you through the home buying process. Considering that this is a significant investment in your financial and personal future, you need to be very careful who you chose. Talk with at least three agents before deciding on one. The person you select should have a minimum of four to five years of experience in helping other families, like yours, invest in a new home.

But, because it is you and your family that is making the investment, you must understand the entire process so that you can make sure that there are no “short cuts” taken by anyone involved in the process.

After selecting an agent, you must find out and become qualified for the amount of overall investment which you could finance. This is accomplished by sitting down and filling out an application with a highly qualified loan officer. Select a loan officer through the same process you used to find an agent.

The loan officer will review your income, debts, and savings to determine your best financial option. This information will include the initial amount you must invest and the subsequent monthly investment that best suits your budget. They will give you a pre-qualification letter which will include the total investment, monthly investment, and initial investment you can achieve.

Now it is time to make some decisions with whomever you will be sharing the home. A few things to consider are:

· Where do we want to live?
· What schools are important to us?
· What types of amenities (parks, lakes, golf courses, etc.) are central to our life style?
· Is it close to work or commuter options?

Then you need to ponder the type of home you want. Should it be new, old, single story, two-story, have a basement, two car garage, large yard, small yard? Be sure to identify the things you want and separate them from the things you cannot live without.

Using the information you have come up with, create a list of criteria then take it, along with the pre-qualification letter provided by your loan officer, the real estate agent you selected.

Once in possession of these valuable tools, your real estate professional will begin to make a search of the areas and the types of homes you prefer. For many first-time homeowners a brand new home has more advantages than a used one. These advantages include:

· The ability to select the floor plan that suits you.
· Having amenities and finishings you want.
· A home warranty to cover any major issues that may arise after you move in.

If you chose to build a new home instead of buying an older one, your agent will take you to visit the new home communities in the areas you have selected. Once there, you will receive further help from well-trained on-site agents who can walk you through the process of making your selections, writing a contract, meeting with the builder’s field representative, and closing once your home in completed.

If you do not select a brand new home, you will tour used properties with your realtor until you find the best one. You realtor will draft a contract for you and help you negotiate terms and conditions with the seller. Once you have a contract approved and signed by everyone, you need to hire a home inspector to review conditions of the home. Of there are problems, your realtor will negotiate with the seller to fix items that need repaired. In the meantime, you loan officer will be working on your loan and will need you to provide them with documents and information so you can get a fully documented and underwritten loan.

When closing day arrives you will go to the title insurance company and sign all your loan and closing documents.

You’re almost there. But, you will have to wait until the bank lending you the money wires it to the title company so the title company can pay the seller for you. Now, get your keys and move into your new home.

Check out the article on eHow.com